Another Spike in Pension Costs

Member Group : Citizens Alliance of Pennsylvania

December 11, 2014:

The big news lately has been a $2 billion projected deficit for the next fiscal year. The incoming Wolf administration is busy pointing the finger at the outgoing Corbett administration as the cause of the problem. It should not come as a surprise that the reality is a little more complicated.

The biggest single component of the projected shortfall is a $466 million increase in pension costs. As we have noted previously, the pension crisis comes as the result of bipartisan cooperation of the course of decades.

"Meanwhile, the pension underfunding debacle will in the coming decades cripple taxpayers, compromise our Commonwealth’s credit rating, and hamstring school districts…the pension grab of 2001 (Act 9), but he also voted for the pension COLA in 2002 (Act 38), a decade of reduced contributions in 2003 (Act 40), and the cut in contributions (AKA "collars") in 2010 (Act 120)."

Even if there is a deficit for the next fiscal year, and there is some reason to doubt the scale of the projected deficit, there are solutions to the problem that do not involve tax increases. One reform that would save taxpayers billions is eliminating Pennsylvania’s prevailing wage requirements. Other possible savings could come from eliminating corporate welfare that comes from grants and special loans to well-connected businesses.

There is plenty of blame to go around when it comes to our current fiscal condition. However, Governor-elect Wolf and the legislature should not compound the problem by extracting more in taxes from hard working Pennsylvanians.

Citizens Alliance of Pennsylvania (CAP) is a non-profit organization founded to raise the standard of living of all Pennsylvanians by restoring limited government, economic freedom, and personal responsibility. By empowering the Commonwealth’s employers and taxpayers to break state government’s "Iron Triangle" of career politicians, bureaucrats, and Big Government lobbyists, this restoration will occur and Pennsylvania will prosper.